Tesla (NASDAQ:TSLA) Third-quarter results are due this week, with the electric vehicle giant expected to release its quarterly statement Wednesday, October 22 after the market closes.
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Ahead of the release, Wedbush’s Daniel Ives, an analyst who ranks in the top 4% on Wall Street, notes “gradual positivity” on the reading, with optimistic sentiment due to a pace of deliveries exceeding that of some EV demand before the U.S. EV tax credit expires and a modest recovery in sales in China. “After a few rough quarters, we are finally starting to see stable demand trends for Tesla,” the 5-star analyst said. “With the abundance of some Model Y refreshes, we expect generally positive feedback on more stable demand through the end of the year.” That said, Ives also notes that the expiration of the U.S. electric vehicle tax credit and continued weak demand in Europe remain obstacles at the moment.
For the quarter, consensus estimates call for total revenue of about $26 billion, with about $19 billion coming from auto sales – a goal Ives believes is achievable given strong performance in electric vehicle deliveries and power generation. Gross margins (excluding credits) are expected to continue to improve from last year’s lows, while surpassing the expected EPS of $0.53 is not out of the question, particularly if the higher-margin energy division performs better.
While previously a headwind, China has now become a “source of strength,” with the Model Y fueling additional demand in the region. The new six-seater YL model has also played a major role in attracting new buyers, although more and more lower-priced models are entering the market. “Despite this tariff war playing out and changing daily, we believe Tesla’s massive presence in China is a relatively good sign for Musk and Co. as Tesla’s Shanghai Gigafactory produces a significant amount of its global vehicles while rare earth minerals remain a crucial component for several products within the TSLA ecosystem (including Optimus),” Ives explained at this subject.
As for what to watch for during the earnings call, the focus will be on the rollout of Tesla’s Robotaxi across the United States, the production ramp of Cybercabs and Optimus expected in 2026, and updates on new models planned for early next year. While Wednesday’s results and guidance will be important, Ives believes they risk “taking a back seat” to Tesla’s broader AI ambitions. “We continue to firmly believe that the most important chapter in Tesla’s growth story begins now with the AI era,” Ives said. It starts with autonomy, then extends to robotics, with Ives estimating that the autonomous segment alone could be worth $1 trillion to Tesla’s valuation over the next few years – a valuation that will begin to be “unlocked over the next few months.”
Ultimately, Ives maintained an Outperform (i.e. Buy) rating on the stock, backed by a $600 price target, implying that shares will post 37% year-over-year growth. (To see Ives’ track record, click here)
Ives’ positive stance has support from 15 other analysts, but with 13 Holds and 10 more Sells, the stock only boasts a Hold consensus rating. Meanwhile, the average target of $366.35 implies shares will lose 17% in the coming months. (See Tesla stock forecasts)
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Disclaimer: The opinions expressed in this article are solely those of the analyst featured. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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